GameStop Corp (NYSE:GME) shares continued to fall in aftermarket trading despite the retailer announcing its first profitable second quarter in seven years.
Net income came in at $14.8 million for the three-months to June, a significant turnaround from a $2.8 million loss in the same period last year.
Earnings per share (EPS) were $0.01, beating analysts' expectations by $0.10.
The positive bottom line arrived despite net sales falling sharply to $798.3 million, from $1.164 billion in a year earlier, missing revenue expectations by $97.37 million.
A key factor in GameStop's profitability was a reduction in selling, general, and administrative (SG&A) expenses, which decreased to $270.8 million, compared to $322.5 million last year. However, SG&A expenses as a percentage of net sales increased to 33.9%, up from 27.7% in 2023.
Furthermore, the company’s strong cash position of $4.2 billion meant interest income from these reserves was sufficient to offset operating losses.
The gaming retailer's return to profitability is a notable achievement, given its struggles over the past several years amid changing consumer behavior and increased competition from online platforms.
However, the shares were down 10.6% in premarket trading on Wednesday.